Housing market sentiment remains subdued in the UAE, where property prices and rents have been on a decline due to the economic fallout of the coronavirus pandemic.
Nearly eight in ten (74 percent) of UAE residents polled by an investment firm said they expect apartment and villa prices to decline in the second half of 2020, while an almost equal number of tenants have secured lower rents.
These are some of the findings released by investment and research company Peninsula Real Estate, as part of its second home sentiment survey.
“[The research] has demonstrated poor sentiment towards real estate in the Gulf,” said Christopher Payne chief economist at the firm.
“The survey results reflect the negative sentiment brought on by the COVID-19 pandemic, and its significant impact on the global economy during [the first and second quarter],” added Chris Roberts, CEO of Eltizam Asset Management Group.
Property sales prices and rents in the UAE have been on a downtrend in recent years, primarily due to a huge supply glut. The decline has recently been exacerbated as the coronavirus pandemic has turned investors cautious and many tenants have been unable to upgrade their accommodation or continue renting amid job losses and salary cuts.
In its latest analysis, real estate consultancy firm Asteco noted that residential and commercial rent declines in Dubai could “intensify” while market conditions in Abu Dhabi could “worsen” with declining demand.
Rental values for apartments, villas and offices in Dubai dropped by 13 percent, 10 percent and 13 percent, respectively, in June compared to a year earlier.
In the latest survey, 75 percent of the tenants in the UAE said they had renegotiated their lease in the last six months and that their rent had been reduced as a result. A third of the respondents reported that their rent dropped by 10 percent or more.
About 59 percent of the respondents also expected the value of their home to fall in the second half of the year. Overall, residents in the UAE expected rents and prices to fall by 8 percent in the remainder of 2020.
In Saudi Arabia, 40 percent said they expect rents and prices to fall in the second half of the year.
However, Roberts said that the UAE government’s recently announced stimulus programs, coupled with the gradual reopening of the various sectors, could lead to a shift in sentiment later this year.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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